SECRETARY CLINTON: Thank you very much, David, and I’ll look forward to seeing your Ellen DeGeneres imitation. I’m very pleased to be here, and I want to thank all of you for your attention to this event and the topics that have been covered.

Before I begin, I want to say a few words about the unfortunate and counterproductive resolution at the United Nations General Assembly that just passed, because it places further obstacles in the path to peace. We have been clear that only through direct negotiations between the parties can the Palestinians and Israelis achieve the peace that both deserve: two states for two people, with a sovereign, viable, independent Palestine living side by side in peace and security with a Jewish and democratic Israel.

And I see my longtime friend and colleague, Ehud Barak, here, and I know he would agree with that, as both the most decorated soldier in Israeli history and a distinguished public servant. I’ll have more to say about this later, but I did want to begin by recognizing the challenge that this will surely present.

I want to add my words of welcome to all of you. I want to thank Admiral McRaven for being here. It’s wonderful that you are here, Bill. We very much appreciate your participation. Foreign Minister Sikorski, a good friend and colleague, who himself is a top global thinker – well deserved because of the careful, comprehensive views he’s developed over many years of hard work about issues as fundamental as freedom.

And of course, I see right before me a wonderful friend and colleague, former Senator John Warner, who has been just a great example of public service – military and civilian – his entire life. And to all of our friends and colleagues from the diplomatic corps. And thanks, of course, to David and Susan and Deb and everyone at Foreign Policy for joining with the State Department’s Office of Policy Planning to organize this conference about transformational trends. And I want to thank Jake Sullivan and everyone at Policy Planning. When Jake Sullivan first came to work for me, I told my husband about this incredibly bright rising star – Rhodes Scholar, Yale Law School – and my husband said, “Well, if he ever learns to play the saxophone, watch out.” (Laughter.) Now we travel all over the world together and people say how excited they are to meet a potential future president of the United States, and of course they mean Jake. (Laughter.)

Well, I will state the obvious to begin. We do live in a rapidly changing world. And many of the constants that shaped American foreign policy for decades are shifting. That poses new challenges but also new opportunities for our global leadership. Let me offer a few examples.

First, our alliances in Europe and East Asia are stronger than ever. After four years of repairing Iraq-era strains and answering questions about America’s commitment to diplomacy, our staying power, our global leadership, we are working across the board on so many important issues to all of us. At the same time, however, many of our allies are struggling with serious economic challenges and shrinking military capabilities. This will have implications for how we uphold the global order going forward.

Second, China’s peaceful rise as a global power is reaching a crossroads. Its future course will be determined by how it manages new economic challenges, differences with its neighbors, and strains in its political and economic system.

Third, in the Middle East, the Arab revolutions have scrambled regional power dynamics. And the energy revolution around the world will likely further change the region’s strategic landscape in the coming years. Indeed, America’s increasing energy independence will have far-reaching implications not only for our economic future, but for our security relationships around the world.

Fourth, economics are increasingly shaping international affairs alongside more traditional forms of national power. Emerging powers like India and Brazil are gaining clout because of their size, of course, but more the size of their economies than of their militaries, more about the potential of their markets than their projection of what we used to think of as power. Meanwhile, the global economic system – open, free, transparent, and fair – that fueled unprecedented growth is now under unprecedented pressure from trade imbalances, new forms of protectionism, the rise of state capitalism, and crippling public debt.

Finally, the traditional sources of America’s global leadership are in need of renewal, a task for all of us. Now the cottage industry of Cassandras and declinists have dramatically overstated this case. But it is true that the reservoirs of goodwill that we built up around the world during the 20th century will not, cannot last forever. New generations of young people do not remember GIs liberating their countries or American development assistance changing the face of their economies or literally saving generations from hunger and disease. They are more connected and engaged with the wider world than their parents and grandparents could have ever imagined, but they face mounting social and economic challenges and are not automatically pro-American.

So, how should we – how should America lead in this changing world? As we look ahead to the next four years and the years beyond, what should top our agenda? Well, one thing I’ve learned and that you’ve been discussing all day is that the best-laid plans are quickly turned on their heads by the rush of events. And certainly the first job of our nation’s policymakers in the years ahead will be to get the big crises right, whether that’s Iran, North Korea, or some unexpected threat. But we cannot allow the in-box to overwhelm us. There also has to be room to think out of the box. We have to deal with the urgent, the important, and the long term all at once.

Now I mentioned five significant ways in which the international landscape is shifting, so let me offer five big-ticket agenda items that we absolutely have to get right as well. This starts with following through on what is often called our pivot to the Asia Pacific, the most dynamic region in our rapidly changing world.

Much of the attention so far has been on America's increasing military engagement. But it’s important that we also emphasize the other elements of our strategy. In a speech in Singapore last week, I laid out America’s expanding economic leadership in the region, from new trade agreements like the Trans-Pacific Partnership to stepped-up efforts on behalf of American businesses. The President’s visits to Burma and the East Asia Summit highlighted the democratic values and diplomatic engagement that power the pivot.

None of this is about containment. It's all aimed at advancing a rules-based order in the Asia Pacific that will drive peace and prosperity for decades to come. And by the way, that’s why we need to ratify the Law of the Sea Treaty as soon as possible, something that Senator Warner has been leading us on. Over the next four years, the region will be watching to see whether America will make the diplomatic, military, and economic investments to lock in this strategy. That is exactly what we need to do.

Now, when we talk about a pivot, we have to be mindful about both ends of the equation. The end of the war in Iraq and the winding down of the war in Afghanistan do create an opportunity to increase our engagement in Asia. But this does not mean we are abandoning our traditional allies in other parts of the world or taking our eye off the ball when it comes to fighting terrorism and finishing the job in Afghanistan.

Bin Ladin is dead and the core of al-Qaida’s leadership has been decimated. But the threat from its affiliates in places like Yemen and North Africa is still very real. So in the years ahead, we need to accelerate an integrated counterterrorism program that uses all our tools – civilian as well as military, multilateral as well as unilateral – to go after terrorist finances, recruitment, and safe havens; in effect, to marry up with the extraordinary work that Admiral McRaven leads on behalf of our special forces.

In Afghanistan, as we transition full responsibility for security to the Afghan Government in 2014, we also need to focus on helping the Afghans crack down on corruption, move toward economic self-sufficiency, elect their new leadership in 2014, advance a peace and reconciliation process, and pursue a regional framework, hopefully with Pakistan as a constructive partner.

And in Europe, we need to continue modernizing NATO for the demands of today's global landscape, including unconventional threats like cyber warfare, and we need to stand by the EU as it meets its economic challenge in the Eurozone. Because as we move to seize the opportunities of the 21st century, including in the Asia Pacific, we need our traditional partners of first resort right by our side. I spoke about this earlier today at the Brookings Institution. So let me just add this: America is not pivoting from Europe to Asia; we are pivoting with Europe to Asia. We have deepened and intensified our dialogue and collaboration with Europe about how to work together in the Asia Pacific to our mutual benefit.

Now the second item on the agenda is closely related to the first. We need to successfully manage our relationships with emerging powers like China and India. Navigating the U.S.-China relationship is uniquely important but also uniquely challenging, because, as I have said on many occasions, and as I have heard Chinese leaders quote my words back to me, we are trying to write a new answer to the old question of what happens when an established power and a rising power meet. No one should have any illusions that this will be smooth or easy. But there is reason to hope that over the coming years we can, in fact, chart a path that avoids conflict and builds on the areas where our interests align.

Consider what happened last May. I touched down in Beijing for the fourth round of the U.S.-China Strategic and Economic Dialogue with a jam-packed agenda that included everything from the South China Sea to intellectual property rights to North Korea provocations. But the world’s attention was focused instead on the fate of a blind human rights dissident who had sought refuge in our American Embassy. Suddenly an already delicate trip had become an outsized test of the U.S.-China relationship. This could have been, and many predicted it would become, the spark for a serious breach between two great powers unable to trust or understand each other. But this is not 1912, when friction between a declining Britain and a rising Germany set the stage for global conflict. It’s 2012, and a confident America has encouraged China to take greater responsibility in regional and global institutions. And we have built mechanisms like the Strategic and Economic Dialogue that help manage disagreements and promote trust.

In the end, the relationship we have worked so hard to build with China proved more durable and dynamic than many feared. Both countries stayed focused on our shared agenda and engaged candidly on a wide range of critical issues. And today, that dissident is safely studying law in the United States. Looking ahead, we have to build on this foundation. As I like to tell my Chinese counterparts, zero-sum thinking will only produce negative-sum results.

This also applies to our relationship with Russia. We have made some progress with Moscow on areas such as nuclear arms reduction, sanctions on Iran, and trade. And we continue to seek new issues where we can cooperate together. But the reality is we have serious and continuing differences with Russia – on Syria, missile defense, NATO enlargement, human rights, and other issues. So we have to take a smart and balanced approach going forward. We need to continue expanding our engagement with Russia, but with very clear eyes about where we draw our lines.

We also have to engage with a set of emerging democratic powers like Brazil and Mexico, India and Indonesia, South Africa and Turkey, that are exercising greater influence in their regions and on the world stage. The strategic fundamentals of these relationships – shared democratic values, common economic and security priorities – are pushing our interests into closer convergence. This is reflected in the broad strategic dialogues we have launched with these emerging powers. The key going forward will be to encourage them to leave behind the outdated politics of the past and take up the responsibilities that come with global influence, including defending our shared democratic values beyond their borders.

Let me turn to the third element of our agenda, what I call economic statecraft, because this will certainly help to shape our engagement in Asia and our relations with emerging powers. The United States is moving economics to the center of our foreign policy. In response to the trends I mentioned earlier and that you have been discussing, countries that are gaining influence more because of economic prowess than military power, and market forces shaping the strategic landscapes, are clearly driving change. We can either watch it or shape it.

Last year I laid out America’s economic statecraft agenda in a series of speeches in Washington, Hong Kong, San Francisco, and New York. Since then, we’ve accelerated the process of updating our foreign policy priorities to take economics more into account. And that includes emphasizing the Asia Pacific region and elevating economics in relations with other regions, like in Latin America, for example, the destination for 40 percent of U.S. exports. We have ratified free trade agreements with Colombia and Panama. We are welcoming more of our neighbors, including Canada and Mexico, into the Trans-Pacific Partnership process. And we think it’s imperative that we continue to build an economic relationship that covers the entire hemisphere for the future.

Africa, which is home to seven of the world’s ten fastest-growing economies. People are often surprised when I say that, but it’s true. And we are approaching Africa as a continent of opportunity and a place for growth, not just a site of endless conflict and crisis. All over the world, we are turning to economic solutions for strategic challenges; for example, using new financial tools to squeeze Iran’s nuclear program. And we’re stepping up commercial diplomacy, what I like to call jobs diplomacy, to boost U.S. exports, open new markets, lower the playing field – level the playing field for our businesses. And we’re building the diplomatic capacity to execute this agenda so that our diplomats are out there every single day promoting our economic agenda.

Now, our new focus on economics is also changing how we practice development around the world. Consider this: In the 1960s, official development assistance from countries like the United States represented 70 percent of the capital flows going into developing countries. Since then – even though we have actually increased our development budgets – because of surging private investment and trade, that official development assistance represents just 13 percent of those capital flows. So we are refocusing our approach to development to better harness market forces and make public sector investments that catalyze sustainable private sector growth.

Now, the fourth agenda item is very much on our minds today. What does the future of the Arab Spring hold for those who are experiencing it and for all the rest of us? One day we see the new government of Egypt stepping up to help mediate a cease-fire in Gaza, and the next it is raising concerns through new far-reaching constitutional decrees. We see territory slipping from the grips of the Assad regime, even as the opposition faces questions about its own coherence and the presence of extremists in its midst. Libya has freely elected moderate leaders, but has also become home to extremists and roving militias. Iran continues to cling to its nuclear ambitions while its economy crumbles. And just today, the Palestinian Authority, which has eschewed the violent path of Hamas and others, pursued a diplomatic move at the UN that is counter-productive to the cause of a negotiated peace.

I will have more to say about that tomorrow night at the Saban Forum here in Washington, but for today let me offer this one thought for U.S. strategy in the region going forward. We cannot view any of these challenges or changes in a vacuum. They are all connected, and our strategy needs to account for the intersections and relationships.

For example, you cannot understand what happens in Gaza without tracking the path of the rockets from Iran, or how the upheaval in Syria and the rise of the Muslim Brotherhood in Egypt have affected Hamas, how the treaty between Egypt and Israel remains the bedrock for peace in the region, despite all the change going on around it, and how Israel’s concerns over Iran’s nuclear program shape its overall security posture. Then there are the economics of border-crossings and fishing rights, and concerns about smuggling and arms proliferation, and the list goes on.

So the United States really does need to bring an unprecedented level of strategic sophistication to these problems, rather than just chasing after the crisis of the moment. American policymakers need to play chess, not checkers. And although some would have us wall off certain challenges, that is just not realistic in today’s world.

And that leads to the fifth area, a set of cross-cutting and interconnected global challenges that defy both national borders and easy solutions: climate change, poverty, hunger, disease, nuclear proliferation, human trafficking, women’s rights, international terrorism, and more. No one nation can solve any of these problems alone. Each one calls for a global network of partners – governments, businesses, international and regional organizations, academic institutions, civil society groups, even individuals, all working in concert. Building those coalitions is one of the great tests of American leadership.

We rightly call America the indispensible nation because only the United States has the reach and resolve to rally disparate nations and peoples together to solve problems on a global scale, certainly in defense of our own interests but also as a force for shared progress. Our ability to convene and connect is unparalleled. And that, in the end, in the 21st century, is what leadership is about.

Diplomacy and development are not always glamorous. It’s like what Max Weber said about politics; it’s the long, slow drilling of hard boards. But it is the only way we’re going to be able to bring together the disparate, often conflicting interests in order to move together in this interconnected world.

Here’s one moment that captures this for me. In December 2009, the international community gathered in Copenhagen to try to negotiate a way forward on climate change. Interests collided, talks stalled, tempers frayed. And I remember well late one night being in a very small room in the convention center with a large number of leaders. We emerged after 2 a.m. following a particularly frustrating session. Everyone rushed to the doors. The cars were trying to get to everyone waiting to take all of us to our hotels. We were standing there when Nicolas Sarkozy looked up into the cold Danish sky with exasperation and declared, “After this, I want to die.” (Laughter.) I think that’s how we all felt, to some extent.

But we kept at it. And thanks in large measure to the fun that President Obama and I had in intervening in a meeting to which we were not invited, we hammered out a deal that, while far from perfect, set the stage for future progress on this critical issue, because starting in Copenhagen and continuing in Cancun, Durban, and this week in Doha, we have pushed for a global agreement that would apply to all significant emitters, developed and developing alike, because there is no way to get ahead of this crisis unless we do that.

Over the past four years, the Obama Administration has also struck a deal with car companies to nearly double fuel efficiency by 2025. We’ve doubled production of clean energy, made historic investments in breakthrough technologies, launched new international partnerships like the Climate and Clean Air Coalition to take aim at pollutants like black carbon and methane that account for more than 30 percent of current global warming. That’s grown from just six countries to more than two dozen today.

And we are committed to continue this hard, slow, boring of hard boards in order to take the practical, effective steps necessary to tackle climate change. Our focus is on results – not on today’s headline, but on the trend line. And we’re after what works. We will continue to chase down every opportunity to move forward bit by bit, if that’s what it takes. That is a model for how change happens today, from advancing peace in the Middle East to securing the rights of women to stopping the spread of nuclear weapons step by step, day by day. And there’s no substitute for that hard work, no replacement for diplomacy, and no alternative to American leadership.

So certainly, there is a lot to do in the years ahead to tackle this agenda, and we’ll need to use all the tools in our arsenal. That means institutionalizing smart power, continuing to tap 21st century technologies from social networking to clean cookstoves, building a network of partnerships with other governments to fight terrorism and AIDS, with the private sector to advance food security and financial literacy, and so on. It also means doubling down on good, old-fashioned, shoe-leather diplomacy.

I have found it highly ironic that in today’s world, when we can be anywhere virtually, more than ever people want us to show up actually. Somebody said to me the other day, “I look at your travel schedule. Why Togo? Why the Cook Islands?” No Secretary of State had ever been to Togo before. Togo happens to be on the UN Security Council. Going there, making the personal investment, has a real strategic purpose. The same goes for all those tiny Pacific islands. When you look at the future of Asia, you look at the voting dynamics in key international institutions, you start to understand the value of paying attention to these places.

And let me add that in recent months, we’ve been reminded once again, by its very nature, American diplomacy often is and must be practiced in dangerous places. The men and women who serve our country overseas represent the best traditions of a bold and generous nation. They are no strangers to danger. From Tehran and Beirut to East Africa and Saudi Arabia, and now in Benghazi and so many other places in between, we have seen diplomats and development experts devoted to peace who are targeted by terrorists devoted to death.

That’s why we are taking immediate steps to bolster security and readiness at our missions across the globe. We’ve already dispatched joint teams from the Departments of State and Defense to review high-threat posts to determine whether there are improvements we need in light of the evolving security challenges we face.

And as we mourn fallen friends like Ambassador Chris Stevens, who was fearless in his dedication to diplomacy, we refuse to be intimidated. Our people cannot live in bunkers and do their jobs. So we will do what we always have done: pull together, learn the lessons we must, and improve, because America always emerges stronger and more confident when we do that.

And there should be no mistake this work does makes a difference. That’s why Chris Stevens was in Benghazi to begin with. As we look ahead and consider the future of America’s global leadership, let’s remember what’s really at stake here.

America’s unrivaled military might will always be essential, and we are so grateful for every man and woman who serves in the uniform of our armed services. And our economic strength will be critical. That’s why we have to make the tough choices right now to get our own economic house in order here at home. But America’s global leadership goes deeper than that. It truly is rooted in the values that we champion and the ideals and aspirations we represent to the rest of the world. As my husband likes to say, America’s influence flows more from the power of our example than from the example of our power.

But memories are short, and we can’t afford to rest on the laurels of the past. So it’s our job to reintroduce a post-Iraq generation of young people around the world to principled American leadership. That is part of why I’ve logged so many miles over the last four years going to something on the order of 112 countries, holding town hall meetings with young people from Tunis to Tokyo, shining a spotlight on the concerns of religious and ethnic minorities from the Copts in Egypt to the Rohingya in Burma, putting down a clear marker on internet freedom, going to the UN Human Rights Council to stand up for the rights and lives of the LGBT people around the world, advancing a new approach to development that puts human dignity and self-sufficiency at the heart of our efforts, and pushing women’s rights and opportunities to the top of the diplomatic agenda.

Mountains of evidence tell us that no nation can achieve the progress we all want and need if half the population never gets to participate. So the economic evidence is overwhelming, we cannot exclude the energy and talent that women add to our economies and societies, and we know where women are allowed to and encouraged to participate, societies are more stable, less prone to conflict and the export of terrorism.

So there’s a lot for us to do as we shape our own global leadership and then use it to help shape the world that we want for our children. The United States should be at the head of a growing column of democratic nations, always extending the frontiers of freedom and opportunity, of peace, prosperity, and progress. That’s who we are as Americans. It truly is in our DNA. And that’s what makes us such an exceptional country.

So I thank all of you. As I look around this room, I see a lot of familiar faces of people who have been on the front lines of helping to define, examine, and practice American foreign policy and national security policy for many years. And we need you to keep doing what you are doing, to keep thinking out of the box.

In the years ahead, we will need all the wisdom and perspective that we can possibly gather. But I am absolutely confident that our nation has what it takes to continue leading the world no matter what comes our way. And with your help, and the help of so many others around our country and likeminded people around the world, America will remain the greatest force for peace and progress the world has ever known. And the world will understand and work with us to move toward the kind of future that we all deserve.

MODERATOR: Okay. So Secretary Clinton has graciously offered to take a little time and answer a couple of questions.

SECRETARY CLINTON: Exactly.

MODERATOR: We’ve got 10 minutes, so I’m going to have to forgo the Ellen impersonation; there’ll be no dancing. That should be a relief to everyone. But I’m going to use my host prerogative here and I’m going to offer the first question to my partner here, Susan, and we really only have about 10 minutes.

SECRETARY CLINTON: Well, we can stretch it a little bit. (Laughter.)

QUESTION: Excellent. Very good, because actually I was not going to waste if it was one and only question on the question that probably everybody here wants to ask, so I’m just channeling them. We heard you talking about how 50 percent of the population has been denied a chance to participate, and I actually thought for a moment that you were going to tell us all whether it’s finally time for a man to become Secretary of State. (Laughter.)

Now I didn’t want to waste my one question on that though, so you can tell us of course. We’d be happy to know. But I did want to grab out from your inbox, from the headlines as well as the trend lines, one of the stories that we’re all looking at today, and to ask us – to ask you to give us your assessment about whether you believe events in Syria are finally moving toward a tipping point. And regardless of that, there are reports that the United States is considering some moves that we have not yet taken in the course of this bloody crisis, including possibly recognizing the new Syrian opposition as the official representatives, and potentially considering even arms or something more significant to move forward.

First of all, are those reports accurate? And again, can you just give us your assessment about where things are in a civil war that is 18 months and counting? Thank you very much.

SECRETARY CLINTON: Well, Susan, I think that the short answer is that it appears as though the opposition in Syria is now capable of holding ground and that they are better equipped and more able to bring the fight to the government forces. And so we follow closely where the government still maintains regime control and where it’s contested and where the opposition is making significant inroads. I don’t know that you can say that for the entire country it is yet at a tipping point, but it certainly seems that the regime will be much harder pressed in the next months.

Now having said that, they still are receiving considerable assistance from Iran, from Hezbollah, and we follow what other countries are trying to do for them as well to keep the regime operating. And for a long time, the Syrian opposition was not able to present anything resembling a unified, coherent vision for what a future post-Assad Syria could look like. As you know, there was a lot of work done to help support the Syrians coming up with a new opposition. They are currently meeting in Cairo as we speak. We have been deeply involved in helping to stand them up, and we’re going to carefully consider what more we can do. I will be having much more to say about that as we move toward the Friends of the Syrian People meeting in Morocco the second week of December.

No other decisions have been made yet, but we consider them on an almost daily basis. The United States has provided more than $200 million in humanitarian assistance. Syrian people who have been displaced are facing difficult conditions, given the winter that’s upon them. This is – this remains a very difficult situation to manage because there are so many interests by all of the players, many of which are contradictory.

So Turkey, for example, is very much at the leadership level committed to seeing the end of the Syrian regime, but incredibly worried that nothing be done that empowers the Kurds, particularly the PKK affiliates. Jordan is working hard to maintain stability inside its own country. They are obviously worried about upsetting the delicate demographic balance inside. Lebanon has tried very hard to stay out of it because of their own internal conflicts and the role that Hezbollah plays and the opportunity for Sunni extremists to take up safe havens inside Lebanon, to be able to go back and forth across the border. The Golan Heights has been threatened by Syrian action.

So, I mean, if this were a straightforward challenge, I think we would all have reached a conclusion and have unified behind exactly what we are going to do and how to do it. But indeed, it is and remains extremely complex. So we are doing what we can to support the opposition, but also to try to support those inside Syria, particularly in the local councils who are committed to the kind of continuity in the Syrian governmental institutions so we don’t see a collapse and a disbandment of institutional forces that we know from our Iraq experience could be extremely dangerous, and that they can present this united front more and more to the international community, and most importantly to people inside Syria.

So, yeah. We’re constantly evaluating, we’re constantly taking action, and I’m sure we will do more in the weeks ahead.

MODERATOR: Okay, very good. Go over here first, then we’ll go to Robin.

QUESTION: Thank you, Madam Secretary, for your comments. My name is Oriana Skylar Mastro. I’m a Fellow at the Center for a New American Security in the Asia Pacific security program, so it’s not surprising I’m going to ask you a question about China.

You mentioned UNCLOS, and I agree that the ratification would give the United States more leverage. But as you know, China has a different interpretation of UNCLOS, specifically that naval passage or even civilian vessels that are engaged in activities that they find not to be peaceful would not be protected under that. I feel that a new Impeccable incident or an EP-3 now with the rising tensions between the two countries could be detrimental.

So my question is: I think this is broader view that the Chinese have that U.S. presence, economic or diplomatic, is destabilizing. In your interactions with Chinese leaders, what are you doing to convince them that that’s not the case? Do you feel like you’re being convincing? And if not, what are the main obstacles? Thank you.

SECRETARY CLINTON: Well, you might need a psychiatrist to answer that because we certainly have made it as clear as we possibly could that the Pacific is big enough for both of us, indeed for all of us, that the United States historically, for more than 150 years, has been a Pacific power just like we are an Atlantic power. We have a lot of treaty alliances in the region that we take seriously. We have trading partners and other commercial interests. So we’re there to stay. We are present now and into the future. And being present means that we have our own views that we share with the Chinese and other countries in the region about what it means to be a responsible stakeholder, as we hope China is, with respect to all of these areas that you are referencing.

The efforts by the ASEAN nations to work toward a code of conduct with China over the South China Sea is certainly an effort we support. We are not involved in it. We’re not doing it. It is something that they are doing for themselves. But it is important because you can’t, in the 21st century, permit anyone’s claims to territory that creates instability, tensions, and potentially conflict to be unanswered if you’re going to try to maintain peace and security.

So we’ve explained this to the Chinese. Their response is: What we claim is ours. And our response is that’s why we have processes and mechanisms, and what you’re claiming is also being claimed by others. We have not just the South China Sea but the East China Sea, with the dispute between China and Japan, because for the United States being a global power, we could see the same thing happening in the Arctic, in the Mediterranean. I mean, it is not just about the South China Sea.

So, certainly the Chinese are going to assert the broadest claim they possibly can. But I think if we want a rules-based order that deals with everything from territorial disputes to intellectual property rights disputes, in order to maintain stability, peace, prosperity, then we have to stand up and speak out in support of these broad tenets. And we have made it abundantly clear we do not claim any territory, and we are not taking sides in any of the territorial claims.

So this is partly one of these long processes that we just keep working on. And I think what happened at the East Asia Summit, where the Cambodians tried to basically gavel the summit to an end and have a communiqué that made no reference to these issues, and was interrupted by the Philippines, Singapore, Vietnam, and others, was a good sign, because those countries have every right to stand up for themselves. And that’s why we would like to see a code of conduct and a process to try to resolve these disputes.

So I think that this is a work in progress. There isn’t any shortcut to just continuing to raise it. At one point in one of my long discussions about this, one of my Chinese interlocutors said, “Well, we could claim Hawaii.” I said, “Well, go ahead, and we’ll go to arbitration and prove we own it. That’s what we want you to do.”

So I think that this is a learning process for everybody, because why are these now – these old territorial disputes coming to the forefront? Because people think there are resources, and they want to drill, and they want to find out what’s there. And they think it’s got material benefits for them. But it has to be done in a lawful way. And that’s why I’ve advocated strongly that we accede to the Convention on the Law of the Seas, because it will strengthen our hand in making these cases.

QUESTION: Robin Wright.

SECRETARY CLINTON: Hi, Robin.

QUESTION: I want to ask you about Iran, and to speak with the same kind of candor you did about Syria. This morning, Dennis Ross said that he thought this year was going to be a decisive year. Apparently, one of the U.S. representatives in Vienna today said that we’re talking about a March deadline – if you could explain that a little bit further.

And tell us realistically what prospects you think there is for compromise with Iran, given the past year of efforts by the United States.

And also, if you believe that Israel is fully on board in letting the United States take the lead and not going off on its own path.

SECRETARY CLINTON: Well, as to the last question, I’m not going to speak to any country’s security decisions other than our own. Obviously, that’s up to Israel to decide. However, I will say that we continue to believe that there is still a window of opportunity to reach some kind of resolution over Iran’s nuclear program. Now, I’m not a wild-eyed optimist about it, but I think it’s imperative that we do everything we can – unilaterally, bilaterally, multilaterally – to test that proposition.

I think what was meant about the March reference was either about the IAEA and its continuing work or the fact that we finished our election and now would be a good time to test the proposition that there can be some good-faith serious negotiations before the Iranians get into their elections, which are going to heat up probably around the March period, heading toward a June election.

I think that it’s a difficult matter to predict, because it really depends upon how serious the Iranians are about making a decision that removes the possibility of their being able to acquire a nuclear weapon or the components of one that can be in effect on a shelf somewhere and still serve as a basis for intimidation.

We get differing reports, as I’m sure you have seen, as to how serious the Supreme Leader is about that, but we want to test the proposition. This President came into office saying he was prepared to engage with Iran, reached out to Iran, without much reciprocity. We put together this unprecedented coalition to impose these very tough sanctions on Iran. We know they’re having an effect internally. But I think that we’ll see in the next few months whether there’s a chance for any kind of a serious negotiation. And right now, I’m not sure that it can happen, but I certainly hope it does.

MODERATOR: Okay, we have time for one more question. And I know this will address a part of the world we haven’t addressed much of today. Let me turn to Muni Figueres.

QUESTION: Thank you. Madam Secretary, I’m Ambassador of Costa Rica. I’m sitting next to the Ambassador of Honduras and the Ambassador of Dominican Republic. So my question to you is about the war on drugs and the violence that it has inflicted. Do you – since we’re all, I think, sort of agreeing that we need to reconfigure it, or it’s being reconfigured even as we speak, are you hopeful about eventually winning it?

SECRETARY CLINTON: Well, I think that one has to look at a couple of examples, because certainly Colombia is a lot more secure and a lot safer than they were 10 years ago. I remember very well when then-President Uribe couldn’t even be inaugurated without the drug traffickers, in alliance with the FARC, basically firing artillery rounds into the square where the inauguration was to be held.

So I think you can, with a comprehensive strategy, succeed in certainly pushing back the tide of violence and corruption that drug trafficking brings. I think Mexico has made progress. They would be the first to say that it’s a very difficult path, but they have succeeded in certainly diminishing the power of some of the main cartels. I think Central America, with both you and the Ambassador from Honduras know how you are squeezed between Colombia and Mexico, and often without the resources that larger countries have to deal with the threats from the drug traffickers, which is one of the reasons why we are trying to work with all of your countries in Central America. Certainly the Ambassador from the Dominican Republic knows how vulnerable the small Caribbean nations are. They don’t have adequate coast guard or any other capacity to protect themselves. We are trying to do more on that front.

So I think that there are several problems that you have to address simultaneously, and certainly working to improve the institutions of government are good no matter what, but also very helpful in the fight against drug trafficking and criminal cartels. You improve your policing, you improve your prosecution, you improve your judiciary. That’s good for the country, but it also is a necessary part of the effort against this criminality. You have to have transparency as much as possible in government. There can be no impunity. And so I think we’ve seen ways that work, but ultimately it’s about providing greater opportunity, greater education, greater economic jobs and growth to populations so that they can have a real stake in their society and can be partners with their governments.

Now, I assume part of your question is aimed at the whole legalization issue. And I think this is an ongoing debate. And we are formulating our own response to the votes of two of our states, as you know, and what that means for the federal system, the federal laws, and law enforcement. So I respect those in the region who believe strongly that that would end the problem. I am not convinced of that, just speaking personally. I think when you’ve got ruthless, vicious people who have made money one way, if it’s somehow blocked, they’ll figure out another way. They’ll do kidnapping, they’ll do extortion. They will suborn officials and basically take over swathes of territory that they will govern and terrorize people in.

So I don’t think that’s the answer. Whether there is some movement that can be discussed, I think will have to be a topic for the future for us.

MODERATOR: Thank you very much.

SECRETARY CLINTON: Thank you. (Applause.)

MODERATOR: Madam Secretary, you asked us to think outside the box. So I’m going to take this out of the box. (Laughter.) We’ve tried, with the exhortation of Jake and his team, to do something here that was a bit of an un-conference, a conference unlike others. And even though conferences typically end with awards, I’d like to present an award that’s a little unlike others in two respects.

In one respect, there’s no hyperbole on this award. Awards are usually covered with extravagant phrases and overflowing with adjectives. This one simply says, “For extraordinary contributions to diplomacy.” I, as Tom Donilon indicated to many of you, am something of a historian of national security and foreign policy. I spend lots of time studying the foreign policy make of the U.S., for the past 75 years particularly. I don’t think it’s an exaggeration to say that as we look back on this period, it will be viewed as extraordinary. I think it will stand out as one of the best examples of leadership in the State Department that we have had. And I would add that for those of you who are weighing this in your mind, it represents a big step forward in that regard because when the State Department can focus on enfranchising the disenfranchised and get as much credit for it as in the past it may have gotten for invading another country, that’s progress for us. (Laughter.) And I think that’s why we consider this an extraordinary achievement.

The other thing on here which is not hyperbole, although it’s extraordinary, is that it says here you’ve been one of our leading global thinkers in 2009, 2010, 2011, and 2012. We don’t like the idea of your leaving office, but it’s nice for you to give somebody else a chance.

SECRETARY CLINTON: Yes. (Laughter.)

MODERATOR: Having said that, the other thing that makes this award quite different from others is that typically when awards are given out, they’re going away presents. We hope that’s not the case with you. Thank you. (Applause.)

SECRTARY CLINTON: Thank you. Thank you very much. Thank you all. I’d love to say hello to some of my friends who I see out there that I don’t get to see enough, but hopefully will in the future. Thank you very much. (Applause.)